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Brexit could be 'very, very bad' for British economy, IMF warns

The IMF has warned that - in a worst case scenario - a "Brexit" vote could be catastrophic. Any economic contraction beyond 1 percent would offset any gains from savings on EU contributions, it says.

A British vote to exit the European Union will likely have negative consequences for Britain in the short term and in the long term, according to the International Monetary Fund, the Bank of England and foreign investors.

"A vote for exit would precipitate a protracted period of heightened uncertainty, leading to financial market volatility and a hit to output," the IMF said Friday in its latest report on the British economy.

On the other hand, a vote to stay in the EU would likely boost the economy in the second half of the year.

is a desire to take its annual contribution to the EU budget and use it at home. But the IMF claims that any economic contraction beyond 1 percent would more than offset any budgetary gains from savings on EU budget contributions.

The IMF report comes one day after Bank of England Governor Mark Carney warned that a Brexit could plunge the country into recession, which is defined as two straight quarters of economic contraction.

Q&A: Britain - in or out of the EU?

A survey of 667 firms found that 78 percent said a Brexit vote would have a negative impact on their business. Only 5 percent thought the impact would be positive.

The poll was conducted by Ipsos MORI between April 19 and May 2, and covered businesses belonging to the bilateral Chambers of Commerce of Canada, France, Germany, Italy, Spain, Sweden and the China Council for the Promotion of International Trade.

On the question of how a vote to exit the EU would affect their future investment in the country,